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There’s a video making the rounds on Facebook and YouTube that seems to be making quite an impression on people.

Unfortunately, it is so filled with false assumptions that the impression it makes is not only wrong, but potentially dangerous.

The video shows that the way people think the wealth is ‘distributed’ in America, and the way that it is actually distributed is quite different.

If you have not seen the video, here it is:

But even in its simple proposition, it makes three key errors.

First

Wealth is not “distributed.” There is no big pile of money or goods awaiting ‘distribution’ by the presenter or anyone else.

Instead, the wealth making “process” is distributed, albeit unevenly. But by focusing on the “outcome” the video creates the false impression that the outcome can, or should be managed.

Second

The video defines wealth as ‘money,’ but in reality the wealth of a nation is made up of the goods and services people enjoy. Wealth is the fresh food at the supermarket, reliable phone service, and the TV set that can be purchased for less than two days labor at the average wage.

If a person has $200, we may say that his wealth is $200, but if that person then buys an iPhone, they have not become less wealthy. They have traded a financial asset for something that ‘enriches’ their life.

Third

The notion that an outside observer, whether a kind-hearted genius or 5000 random people, can design the ideal society made up of hundreds of millions of individual people, each with individual dreams, talents, and intentions, is a false one.

Beside these three basic errors, there are numerous other misrepresentations in the video. Here are some of them:

At one point, the presenter shows an equal distribution of the existing wealth in America across all people, and proclaims, “Here is the dreaded Socialism.”

To his credit, he quickly adds, “We all know that won’t work,” although I got the distinct impression that he wishes it would. And if the “dreaded socialism” were anything like his chart I’d wish it would too.

But it doesn’t.

In Soviet Russia, North Korea, Cuba, and every other socialist country the curve looks much more like this:

Not only is the distribution curve skewed to the “rich” administrators of such societies, but the total amount of wealth to be “distributed” is so dramatically lowered that the average person lives in austerity – albeit more equally.

The presenter, and the 5000 polled, assumed that the amount of total wealth remains the same regardless of system or outcome, but that is false, and can be demonstrated to be false.

The dreaded socialism anywhere outside of a University classroom or YouTube video much more closely resembles a system of monarchy and serfs.

The presenter avoids the experience of the real world, leaving the viewer with the idea that the dreaded socialism is ‘not so bad,’ and then moves on to the so called “ideal” curve:

The video says the wealthiest people are 10 to 20 times better off than the poorest American and adds that, “This isn’t too bad.”

Isn’t too bad? Compared to what?

The shape of a curve tells nothing whatsoever about the condition in which real people live. Pol Pot was about 10 to 20 times better off than the poorest Cambodian who lived in misery before dying in a labor camp.

Is that, “not too bad?”

The presenter seems to be quite impressed that 92% of Democrats and Republicans thought this curve was ideal, but why should it?

Wealth should not be decided at the ballot box. But rather by individual people who vote with dollar bills in a free market.

If that market is free and fair – which ours unfortunately is not – then whatever the curve ends up being is the right curve.

The outcome that matters is in the ‘real’ world, not a curve on a chart.

The video then moves on to discuss the “real” curve, describing it this way:

Here is the actual distribution of wealth in America. The poorest Americans don’t even register. They’re down to pocket change, and the middle class is barely distinguishable to the poor.

It’s a good thing that people do not live on charts.

Although the video laments that the “curve” has kept getting worse over the past 30 years, in the real world life is getting better across the economic spectrum.

Among “poor” Americans today, 99 percent have electricity, running water, and a refrigerator. 95 percent have a television, 88 percent have a telephone, and 71 percent have a car.

These are all vast improvements in the real world for real people over the past 30 years.

The video continues with this popular fallacy:

And the top 1%, this guy, his stack of money stretches ten times higher than we can show. Here’s his stack of cash restacked all by itself. So much green in his pockets that I have to give him a whole new column of his own, because he won’t fit on my chart.

Oh my God! He won’t fit on the chart, people! This is a chart emergency!!!

Okay, take a deep breath. No where but in cartoons and in this video do very wealthy people have a big pile of money that they are selfishly hoarding.

In fact, most of their wealth is held in some other form of asset, whether in businesses (that employ people), or real estate (that gives people a place to live or work), or in other assets that serve society in some way.

The video breaks these assets down to a dollar value to make a point, but the point is wrong.

Even supposing a ‘worst case’ scenario, lets say some rich guy has an offshore bank account in the Cayman Islands with a billion dollars in it. What do you suppose the bank does with the money?

If you think that they pile it in a vault and lock it up for safekeeping, you are very mistaken.

First of all, the vast majority of money does not exist in a paper form that could be put in a vault. Most money today is just an electronic ‘credit’ in a computer.

A Bank will lend some of the billionaires credits out to other people or businesses, to build a house to live in, or a factory to create stuff and jobs. Much of the rest will be used to purchase bonds, most likely U.S. Treasuries.

And what are those bonds used for? Oh things like building bridges, veteran’s benefits, welfare, warfare, food stamps, Pell grants, and every other thing that government wants to spend money on.

The wealth is already being distributed, whether rich greedy people want it to be or not.

This is not to say that all rich people are saints.

Some are crooks.

There are great fortunes being accumulated right now by fraud, corruption, and larceny. It is these immoral practices that are the enemy of society, and need to be opposed wholeheartedly and weeded out.

Its not the money, stupid.

But by simply focusing on money, the video disguises the distinction, providing cover for fraud and replacing it with class warfare. This video is hate speech.

It continues:

I’m sure many of these wealthy people have worked very hard for their money. But do you really believe that the CEO is working 380 times harder than his average employee?

Although many do, CEOs are not compensated for “working hard.” They are compensated for responsible decision making, and risk management that can involve billions of dollars, often their own.

If the average earner does not like it, then he should quit and become the CEO of his own company. The fact that so few do, tells us something very important about the real inequality in society.

The video concludes that the ‘solution’ to its fictional problem is somewhere in between what we have now and socialism:

We certainly don’t have to go all the way to socialism to find something that is fair for hardworking Americans.

But to presume to know what is “fair” and to implement it by decree is, “The Fatal Conceit.”

No one knows what a “fair” outcome is.

Not me, not you, not the man in the moon.

The best we can strive for is a “fair” playing field. Unfortunately, we are quite far from it at the moment, and sadly, videos like this one are a step further away.

9 thoughts on “1 out of 10 Americans are Not Fooled By This Video”

I find your argument to be swinging heavily in favor of conservatism. While you may be correct in that real life example that life is getting better I.E. More running water, TV or cars per person, you are wrong to say that is the deciding factor of what makes people better off. Because we aren’t talking about global comparison, we are talking about the U.S. When you do this, you can’t argue disparity is a good thing. Why? Because it is foolish to think that keeping more money at the top is better rather than have a more equitable distribution. This causes me to conclude that you are a believer in “Trickle down economics” Which let’s just be honest, has failed us terribly. Why? Because under this theory everyone is supposed to be better off, but how can everyone be better off when so many people are struggling to survive? All that has happened is a greater gap between the haves and have nots. What happened when people weren’t so greedy and government had a solid role keeping it that way? Like in the “great covergence” (see Tim Noah’s book the great divergence for reference) when wealth and incomes were more fairly distributed. It is skewed now because of polices that favor those at the top, and because we have tried it for so long, upward mobility has become increasingly harder to achieve. Does the offspring of a wealthy individual ever become poor? no…and how often does someone born into poverty come out of it? all these answers can be found in Tim Noah’s book and on several personal stories from the anthology “The Social Construct: Race, Class, Gender and sex” maybe you should reconsider your argument. I have a feeling you are someone who lands on the have side of the ledger, easy to make the case for yourself isn’t it? Consider those that don’t…maybe you’ll learn something from someone who hasn’t ever had anything and has no hope to move up. It’s not because they don’t want to or lack the effort, its because the system is rigged, and the Wealthy will do anything to keep it that way.

His arguments tend towards conservativism because he is obviously making a markets arguments. His argument is simply that the left focus’es on things that actually don’t matter as much as they think it does. ‘Wealth Distribution’ … wealth is the ability to make money, normally through the use of an Asset, most often a Factory, Machine or piece of property. Of course when we say make money, we are really abstracting some process and away and saying it makes ‘things’. It is actually impossible to make ‘money’, unless a central bank prints it, which results in more money but less value, making all things the same.

The things are what matter. So having wealth concentrated actually makes alot of rational sense. Not everyone owns a factory. Most people earn money by wages, and the increase in your personal value through your experience is not counted as wealth, but that is how you produce money for yourself … where as wealthy people produce wealth through investments.

Income will NEVER be as lucrative as investments. However income is available to everyone, and investments are available only to the saavy or the prudent.

Now I’m a conservative, but I believe income inequality is a problem. However it isn’t a problem you can fix through any kind of distribution scheme, and in fact many distribution schemes can make it worse, since every time you distribute, you create a space for exploitation and you corrupt price signals. This is economics 101.

Furthermore, let us remember that most tax dollars do NOT go to help people. They go to goverment contractors, or to regressive distribution schemes like social security. My social security will pay me about $1500 a month when I retire in exchange for 15% of my income. My 401k Is estimated to pay me over 3000 a month in exchange for 12% of my income, and i’ll have a pile left over to buy a house with.

I’m all for reducing inequality, but you won’t fix the problem through the tax code, and in fact, you might make it worse. Money should only change hands when a product of value is created for the person giving up the money. Anything else distorts the value of the money, and creates spaces for rich well positioned people to make money WITHOUT producing something of value.

First… there is a distribution of wealth… it starts at the federal reserve… where half a trillion dollars goes missing every once in a while and handed over to foreign investors.

Second… There is a Distribution of wealth. There is this thing called a Bail out, where banks all around the country get 100 billion dollars a piece because they are ‘bankrupt’ the irony of a bank… being bankrupt but never actually going bankrupt’

Third the only true attempt at socialism in history… comes from imperial dictators who turned around and killed everyone who opposed the system. Over inflated the currency and created a useless economy…

Fourth… 300 people on this planet… Do have more than 3 billion people on the planet due to central banking fraud and global accumulative debt less than a thousand companies on this planet have over 80% of the worlds wealth.

There are a few problems with the video, but it makes a lot more sense than this article. ronnie would have proud of the author, and we see where almost 40 years of that got us. I think Dax just about covered it.

1: “75% own a car.” That doesn’t mean they have the gas money to drive it.

“A devel­oped coun­try is not a place where the poor have cars. It’s where the rich use pub­lic trans­port.”
– para­phrased from Enrique Penalosa, for­mer Mayor of Bogotá, Colombia

2: I also notice that the “ask a Swede” part is sponsored by the Heritage Foundation. How are we supposed to believe that the woman actually represents the Swedes as opposed to the money she is almost certainly getting from the oligarchs? Even the taxes in the “growth” part of the country were higher than the taxes the USA has now–and I’m sure they had less tax evasion.
3: We do have a problem since we are not addressing climate change that is already harming the world’s poor via droughts and floods. The rich are stopping change in that area, leading me to point #4.
4: Money concentrated in a few allows them to buy off the government, taking the “democratic” out of the “democratic Republic.” We are now a plutocratic Republic.

If we stopped carbon use in the USA tomorrow, it would have almost no effect on the trajectory of climate change. Climate change is driven now by poor countries who do not want to be poor, who have CHOSEN to use fossil fuels, not by an imaginary cabal of rich people protecting their bottom lines. You think China’s 10% growth rate (pulling hundreds of millions of people out of poverty with it) is possible without fossil fuels?

Easy energy is what allowed us to be civilized people. There is no non-economic solution to the climate change problem. Any solution will be created by technology, innovation and markets. Government is physically incapable of solving this problem, though they could help it along with investment into R@D (not into subsidies, which distort the markets, and potentially crowd out innovative solutions that weren’t considered when the subsidy was written).

On Point 4)

Most conservatives would agree with you. Which is why they believe in limiting the power of government. If you have a limited government, it can’t be bought out anymore because it can’t do anything to help a particular business. Instead, because of the strengthening of power (which isn’t the same as regulations, just the ability to make regulations and levy fines at political whim), the incentive to influence government is greater and greater. As a result, people (who are just trying to help their industries), have to go to Washington and compete politically for favor. Businesses don’t want to do this. They want regulations that don’t change year to year, and rules that are simple and easy to follow so they can save on legal and liability costs. They have to go to washington because if they don’t congress would end up passing a law making their buisness illegal. I work in an industry that has the ax over it’s head constantly.

You may have missed the mark about what the video your discussing was attempting to put into perspective. It’s not about fairness, it’s about data and the income gap… very important that you realize the weight that this discussion holds.